question archive Carron Communications, Inc
Carron Communications, Inc
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Carron Communications, Inc., is preparing its cash budget for 2015. Carron ended 2014 with cash of $72 million, and managers need to keep a cash balance of at least $65 million for operations.
Collections from customers are expected to total $11,233 million during 2015, and payments for the cost of services and products should reach $6,129 million. Operating expense payments are budgeted at $2,756 million.
During 2015, Carron expects to invest $1,543 million in new equipment and sell older assets for $108 million. Debt payments scheduled for 2015 will total $611 million. The company forecasts net income of $884 million for 2015 and plans to pay dividends of $316 million.
Prepare Carron Communications’ cash budget for 2015. Will the budgeted level of cash receipts leave Carron with the desired ending cash balance of $65 million, or will the company need additional financing? If so, how much?
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Carron Communications, Inc. |
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Cash Budget |
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Year Ended December 31, 2015 |
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Millions |
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Cash balance, December 31, 2014 |
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$ 72 |
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Budgeted cash receipts: |
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Collections from customers |
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11,233 |
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Sale of assets |
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108 |
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11,413 |
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Budgeted cash payments: |
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Payments for cost of |
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services and products |
$6,129 |
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Payments of operating expenses |
2,756 |
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Investment in equipment |
1,543 |
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Payment of debt |
611 |
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Payment of dividends |
316 |
11,355 |
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Cash available (needed) before financing |
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58 |
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Budgeted cash balance, December 31, 2015 |
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(65) |
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Cash available for additional investments, or |
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(New financing needed) |
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$ (7) |
Carron expects to need new financing of $7 million during 2015.
